Eat Out to Help Out drives UK inflation to five-year low
|bbc.com 16 Sep 2020 at 06:57|
Low inflation - the rate at which prices of everyday goods and services rise - is good for consumers and borrowers, but can be bad for savers.
That is because while it makes things cheaper, it also affects the interest rates set by banks and other firms.
The eating out scheme, which ran from Monday to Wednesday in August, offered 50% off food up to the value of £10.
Discounts for more than 100 million meals were claimed through the scheme.
Prices in restaurants and cafes were 2.6% lower than in August last year, the first time they had been negative since records began in 1989, the Office for National Statistics (ONS) said.
The cut to the rate of value added tax (VAT) also helped drive prices lower, it added.
The discount, from 20% to 5%, lasts until 12 January next year, was introduced on food and non-alcoholic drinks as well as accommodation and admission to attractions across the UK.
The cost of clothing and footwear also fell significantly. And in an indication of the severe effect of the pandemic on travel and tourism, air fares dropped in price as fewer people travelled abroad because of quarantine restrictions.
The ONS said this was unprecedented for August, which is usually the peak month of the holiday season.
"The cost of dining out fell significantly in August thanks to the Eat Out to Help Out scheme and VAT cut, leading to one of the largest falls in the annual inflation rate in recent years," said ONS deputy national statistician Jonathan Athow.
"For the first time since records began, air fares fell in August as fewer people travelled abroad on holiday. Meanwhile, the usual clothing price rises seen at this time of year, as autumn ranges hit the shops, also failed to materialise."